In the wires: Investments in infrastructure will improve and modernise the sector

A spate of new capital investments has the potential to dramatically alter the performance of Algeria’s fixed-line segment. Fixed-line telecoms infrastructure in Algeria has traditionally been challenging to maintain, with demand regularly outpacing supply, leading to a large backlog for fixed broadband connections, as well as connection and speed issues. National telecoms provider Algeria Telecom (AT) has ambitious plans in place to invest in infrastructure upgrades, primarily in the form of laying additional fibre-optic lines to ensure that the majority of the country is connected to the national network. The company has also formed a consortium with other institutions that lay fibre in order to better manage the national fibre network. Mobile operators are also investing in upgrades, and long-delayed plans to increase the Algeria’s international capacity appear to be moving forward once more.

EXTENDING SERVICE: According to estimates from local industry players, the backlog of requests for internet connections is estimated to affect as many as 2m households. The delays have been blamed in part on what is widely regarded as AT’s excessively bureaucratic internal culture and the need for further infrastructure development – problems the company itself has identified in local media. Moussa Benhamadi, the minister of post and ICT, in July 2013 told local media that fixed telephone and internet coverage were currently insufficient. Certain industry operators also blamed infrastructural problems for the backlog. “The reason for the long waiting lists is that AT is not able to install multi-service access nodes (M-SANs) quickly enough,” said Ali Azzouz, the CEO of local ICT firm CBS.

INVESTMENT: Investment to address these issues is under way. AT’s five-year plan for 2010-14 involves investing €4.8bn in network coverage expansion and other upgrades. Plans include an AD140bn (€1.3bn) project by the Ministry of Post and ICT that aims to ensure every town of more than 1000 people in the north of Algeria and every town of more than 500 people in the south of the country have fibre connections. Under the project the company plans to connect 900 new areas to the network in 2013; in all, the firm intends to lay an additional 20,000 km of fibre cable. In March 2013 AT also announced it had received a state-backed AD115bn (€1.06bn) loan at below-market interest rates. AD48bn (€441.6m) of the loan is going to investment in the network in 2013, with plans to add 2m new high-speed connections over the years 2013 and 2014.

In addition to laying fibre, AT’s plans include replacing existing copper network hubs with M-SANs, which should address the firm’s backlog by making it easier to connect new households, as well as problems such as disruption caused by the theft of telephone cables by thieves seeking to profit from selling the copper in them, and slow internet speeds. In June 2013 Azouaou Mehmel, the CEO of AT, told local media that as a result of AT’s investment and upgrades there would be a significant increase in fixed internet speeds in 2014.

Increased connection speeds on the fixed broadband network may be necessary to secure AT’s future as the prospect of competition from mobile broadband looms. However, in June 2013 Mehmel said the firm was not worried about the launch of 3G as it plans to offer much higher speeds over fixed connections than will be available over mobile broadband. The announced investments are unlikely to be the end of the company’s infrastructural spending plans over the medium term; Mehmel also said the company will need to continuously invest in both infrastructure and human resources. There are also tentative plans for fibre-to-the-home (FTTH), although definitive plans for a wider programme have not yet been released.

FIBRE CONSORTIUM: AT and other institutions are also working to better manage existing capacity. In early July 2013, AT, along with state-owned energy and electricity companies Sonatrach and Sonelgaz – which together manage 15,000 km of fibre, as well as national railway operator Société Nationale des Transports Ferroviaires, which controls a network of 5000 km of fibre – came together to create a new jointly owned firm, the Algerian Telecoms Infrastructure Company ( Compagnie des Infrastructures de Télécommunications d’ Algérie) that will be responsible for managing all of the country’s fibre networks. Benhamadi also told press that the government had high expectations for the firm to develop the country’s fibre network and to bring internet to remote areas. The authorities are also hoping other infrastructure-related institutions such as the Ministry for Public Works and Water Resources will join the company so that the infrastructure they control can also be used to extend high-speed internet access.

OTHER INVESTMENT: New investment is not only going into improving traditional fixed-line broadband services. For example, in June 2013 AT announced plans to invest €40m-50m to launch a fixed form of 4G aimed at professionals and that it had launched a tender for the construction of the network. Mobile firms are also spending on upgrades, and are likely to increase outlays significantly once plans to launch 3G services come to fruition. In mid-2012 Mobilis said it would invest AD142bn (€1.3bn) over the course of five years in infrastructure improvements, including increasing its number of base stations from 5200 to 9000, with the aim of boosting its market share to 45%. The firm reported that it invested €100m in the first six months of 2013 on modernising installations and new equipment.

GLOBAL CONNECTIONS: There are also plans to boost Algeria’s international internet capacity. There are currently three active submarine telecoms cables that link the country to the rest of the world: ALPAL-2, which links Algeria and Spain; Med Cable, which links Algeria and France; and the international SeaMeWe-4, which lands at multiple countries in Europe, the Middle East and North Africa and Asia, including Algeria. In February GTH purchased the Med Cable, which links Annaba to Marseilles, from previous owner Orascom.

There may be a need to expand links even further as 3G nears. “There will not be enough international capacity when 3G is launched if nothing is done to increase it by then,” said Azzouz. According to data from the World Economic Forum, the country has international internet bandwidth of 8.9 Kbps per internet user, ranking Algeria 88th out of 144 countries in the “2013 Global Information Technology” report.

A planned new AD2.2bn (€20.2m) cable between Oran and Valencia in Spain, which will eventually provide AT with an extra 1.5 TB of capacity, will help to allay such concerns once completed. The project was originally mooted in 2004 to provide redundancy for cables from Algiers that were severed by natural disasters in 2001 and 2003, cutting off the country’s access to the internet. A tender launched in December 2011 was subsequently cancelled, but the project now appears to be making progress. A new tender was issued in May 2013 and in August the authorities said three firms had submitted bids for the contract, with no further news released as of late 2013. The cable is due to enter service within 14 months of a contract being signed.